The U.S. is too "free" to become a manufacturing superpower

It's probably occurred to them, too.

As Donald Trump doubled tariffs on imported steel and aluminum to 50 per cent, there are other big numbers floating around as well. Namely, that Mr. Trump’s tariffs on steel back in 2018 cost around 75,000 U.S. jobs. His goal at the time was to save about a 1,000 jobs in the steel industry, which happened, but can’t really be called a “win” when you’re receiving 74,000 people unemployed in return.

While Mr. Trump and his inner circle have tried to defend the tariff war, they’ve only managed to fumble. Between the TACO (Trump Always Chickens Out), and threatening companies that try to warn customers about tariff costs, it’s also in no small part because they’re trying to move with a speed that cannot be matched to reach the goal of creating more U.S. based manufacturing.

Mr. Trump has said they want to use tariffs for revenue generation, yet by increasing the rates to ridiculous levels, as they did with China — their biggest supplier of stuff — businesses stopped ordering products from China. No product from China means no tariff revenue.

Yet, somehow, there’s another angle to it all.

During a Senate budget hearing on Wednesday morning, Howard Lutnick said that negotiations with other countries over tariffs are not about getting to zero tariffs or reducing trade barriers; his vision seems to be using tariffs to get countries to stop buying from China and start buying from the U.S..

It’s fumble after fumble.

Mr. Trump’s fixation on trade deficits and surpluses has been mocked constantly because he talks about it as if people in the U.S. are just sending money to other countries. It is, I think, exactly how he sees it. He wants people buying from U.S.-based businesses because he believes that money will follow them.

Yet, it wouldn’t, at least not in the same numbers, because the U.S. cannot make goods as inexpensively as many of the countries they buy from. Little things like a higher standard of living, labour and environmental laws, an expectation of higher wages and requiring businesses to pay for health benefits, to name a few.

However, there’s another, much bigger obstacle to all of Mr. Trump’s plans: freedom.

The irony

The Trump administration has been fairly consistent about wanting to bring manufacturing back to the U.S.; Mr. Lutnick’s comments reminded me that there’s a Trump-like level of absurdity to their goals. They have goals, they just haven’t really thought about what it will actually take to get there. It also doesn’t help that these people seem to be so incredibly entitled that they think saying what they want should be enough to make it so.

One of the reasons that Mexican nationals work on a lot of farms in the U.S. is because farm work is hard, doesn’t pay well, and U.S. citizens don’t want to do it. The same was found with a survey on manufacturing. While 80 per cent of people thought it would be great to have more local manufacturing, only 20 per cent said they’d want to work in the industry.

Ironically, the Trump Administration’s decision to do everything they can to get undocumented workers out of the country will only reduce the number of people in the U.S. willing to do jobs for the lower cash-only wages that most U.S. citizens wouldn’t touch with a ten-foot pole. It’s almost the exact population the U.S. would need to cultivate in order to be able to even begin to compete with jurisdictions like China, Cambodia, and Bangladesh.

And that’s part of the problem; it would be one thing if they just wanted to close off their borders and make all their own stuff but some, at least, seem to think they’ll be able to sell that stuff to the rest of the world, too.

In another twist of irony, the only future in which they would be competitive enough to do so would be one where all of the countries currently supplying the U.S. became wealthy enough to raise their own wage expectations; something that will take longer if manufacturing moved out of those countries.

China’s population is more than four times that of the U.S. at 1.4 billion. Just over 110 million people work in the manufacturing industry — that’s a third of the size of the U.S. population. The U.S. doesn’t have the people power to create the vast industry that would be necessary to become the world’s “department store”.

The Trump Administration is trying to leverage their country’s buying power because it has become a nation of consumers. One of the reasons it’s been able to become a nation of consumers is because products can be acquired for far less money from other countries. If the Trump Administration, or the next one, managed to get what they wanted and everything was being manufactured in the U.S., that buying power would disappear because the cost of consumption would increase.

It’s likely one of the things that is also a factor for any manufacturing business in considering the move. If they already sell outside of the U.S., they know their costs will go up and therefore so will the prices.

There’s also the possibility that China could decide to flex its manufacturing muscles as the U.S. was trying to build their own; sort of like how Saudi Arabia takes a hit on oil prices every once in a while to remind the rest of the world that they alone allow everyone else a share of the market. While Mr. Trump is going out of his way to alienate every other country, he’s certainly not doing much to make the U.S. the retailer of choice in his manufacturing fantasy.

Freedom

In addition to their exceptionally large population, China also has a lot of rules. They have restrictions on what internet content their population can access and far more control over their own media and news than in the country of the First Amendment. If the Chinese government demands quarantines and travel restrictions, it can be fully enforced by a giant military; there’s none of this “freedom to infect everyone else with a novel virus” crap. People in China have freedoms but not like what the U.S. has become accustomed to; especially when it comes to purchasing power.

While I think many in the U.S. would be perfectly fine with buying “made in U.S.A” products, they’ll notice that their money doesn’t go as far. Then they’ll start feeling worse-off financially. When people feel like they’re not doing as well financially, they get mad at the government; and if that happens, they vote people out.

The large-scale changes that the Trump Administration is trying to make are not something that can be done in one term. They also have the mindset that other people are going to built what they want — tariffs will force companies back, they said.

Sure, that’s the easy part with none of those pesky considerations businesses have to make like shelling out a few million to build a new factory and train a new workforce, and then employ said workforce. They also have to wonder if the tariff chaos will continue, and if they have to bring any product in to make what they do, being in the U.S. doesn’t actually help them avoid tariffs.

The sheer uncertainty of it all means they’re probably going to try and wait the Administration out, which means they won’t get their manufacturing utopia either.

Freedom: it’s super until you try to force people to do things they don’t want to.

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